Over the past decades, Iran has found itself on a complex political and economic path, where regional security priorities have intersected with the demands of domestic development. However, economic and financial indicators clearly reveal that a significant portion of the country’s resources has been directed toward military activities and external conflicts, rather than being invested in improving citizens’ living standards and developing infrastructure.
For years, Iran has allocated a considerable share of its budget to military spending. Estimates indicate that this spending has reached around 2% of GDP in recent years. While this percentage may appear modest compared to some countries, in Iran’s case it does not reflect the full picture. Parallel institutions, such as the Islamic Revolutionary Guard Corps (IRGC), operate with separate and non-transparent budgets, meaning that the actual scale of military spending is far greater than official figures suggest.
Unofficial estimates indicate that total defense spending may reach tens of billions of dollars annually, at a time when the economy is under severe strain.
This spending has not been limited to domestic needs but has extended to supporting Iran’s allies across several countries in the region. Since the outbreak of the Syrian crisis in 2011, Tehran has spent billions of dollars supporting the regime of Bashar al-Assad, in addition to funding armed groups in countries such as Iraq, Lebanon, and Yemen.
Some estimates suggest that Iran’s total spending on these proxy wars has exceeded $20 billion since 2012, with continued annual financial flows to sustain these networks.
This military-oriented approach has come at a heavy economic cost. Iran’s regional policies have been closely linked to a series of international sanctions, particularly since 2018, which have led to a sharp decline in oil exports the backbone of the Iranian economy.
Estimates suggest that the country has lost between $300 billion and $450 billion in oil revenues over the past decade due to these sanctions.
At the same time, the national currency, the Iranian rial, has lost more than 90% of its value, leading to unprecedented inflation rates and a severe decline in citizens’ purchasing power.
While these resources were being drained abroad, vital sectors within Iran have suffered from underfunding. Infrastructure in many cities requires comprehensive modernization, and the healthcare sector faces significant challenges, especially amid successive economic crises. Iranian youth also suffer from high unemployment rates, while investment and development opportunities continue to decline due to economic instability.
One of the most prominent aspects of this resource drain is spending on military and nuclear programs, which have cost the state tens of billions of dollars over many years. Despite their strategic importance from the perspective of decision-makers, their economic cost has been substantial, particularly in light of limited resources and growing domestic needs.
With the escalation of regional tensions in 2026, Iran’s financial burdens have increased significantly.
The costs of military operations have risen to unprecedented levels, with reports of daily spending reaching millions of dollars. In addition, mutual military strikes have led to the destruction of parts of the country’s infrastructure, adding new burdens related to reconstruction an effort that may require tens of billions of dollars in the future.
In conclusion, the Iranian experience reflects a clear example of what can happen when states prioritize conflict over development.
Resources that could have been used to improve living standards, develop education, and strengthen the economy have instead been largely directed toward wars and conflicts, resulting in a weakened domestic economy and increased suffering for citizens.
